Opening a Nanobrewery: Tips from the Pros

With aspirations to take a homebrewing hobby pro, a more affordable option is opening a nanobrewery (we at BYO define nanos as five barrels or less). Equipment and space is smaller, sales are primarily on-site, and if run well it can lead to profitability. Three pros weigh in on the decisions they made to open nanobreweries.

Brewer: Nicole Carrier, Throwback Brewery in North Hampton, NH

After homebrewing for a decade, Annette got her certificate in brewing from Siebel Institute while also doing an internship at Smuttynose. After that, she convinced me that with her aptitude for brewing and problem solving, and my background in marketing and business and my love of spreadsheets that we should open a brewery. It didn’t take too much convincing. We decided to start with a 3-barrel system that Annette fabricated together from used tanks with the help of a local welder. We made that decision for several reasons. First of all, we wanted to bootstrap our business ourselves, so spending judiciously was always top of mind. Second, we wanted to test the market’s appetite for our beers and our story. It’s one thing to have your friends and families tell you that they love your beer — it’s quite another thing to have complete strangers tell you that they love your beer. We wanted to make sure that our beers were warmly embraced by the public before going big. Finally, not to say that we had low expectations, but we certainly didn’t expect to sell as much beer as we did! We were extremely and very pleasantly surprised as to how customers and our community supported us.

The biggest differences we found going from homebrewing to professional brewing were around yeast, packaging, and safety. How the yeast acts in 5-, 100-, and 500-gallons is very different. It’s not a direct scale up, and the same goes for pretty much all ingredients. When we were homebrewing, we would re-use yeast, but if you’ve never done that before, then you would need to learn about yeast management practices such as harvesting, tracking, and cell counting. I could spend hours talking about packaging! There is quite a difference from brewing a batch of beer and filling up your pony keg or gravity feeding into bottles for personal consumption versus packaging beer for distribution. Part of the learning curve around packaging includes how to pour consistent fills, dealing with minimizing dissolved oxygen, labeling on wet bottles, and even choosing packaging equipment. Also, at a larger size, your equipment becomes more automated, and there are new concerns like best practices around cleaning and maintaining that equipment. There are also safety concerns that homebrewers might not think about. Instead of a pot on the stove and pretty safe sanitization chemicals, you have hundreds of gallons of boiling wort, dangerous chemicals circulating in tanks much bigger than you, and high pressure along with a dozen other concerns. Finally, because Annette is an engineer, she dove really deeply into the science of brewing really quickly. While homebrewing she had our water analyzed, took pH readings, filtered the water, sometimes adjusting with gypsum, etc. If you are a homebrewer with plans of scaling up to a nano size, it would be well worth your time to do some research into water chemistry.

In July 2015 we bought a 12-acre farm property and re-habilitated the beautiful post & beam barn into our brewery and a restaurant. We also went from a 3-barrel system to a 15-barrel system. From a business perspective, the biggest advantage of a larger system is just the pure efficiencies — it takes us the same amount of time to brew 5 gallons (19 L) as it does 3 barrels as it does 15 barrels. On the other side, if you are into experimentation and making wacky brews, it will be a lot easier to sell 3 barrels of it than 15 barrels, which is one advantage of a nano brewery. That being said, if you have a large direct-to-customer channel like a brewpub, then that shouldn’t be a big concern. Even at our current 15-barrel size, we can sell through a unique beer — like our Beet Wit — in our pub in a reasonable amount of time. The other side of the coin is that if you come up with a very popular brew, you have it around longer than a day and are able to share it with more customers! For example, we recently released our She Sells Seashells, a lightly salted hoppy blonde ale. In just over a week, the entire batch was gone. On our smaller system, this beer would have been around for only a day or two.

The biggest differences we found going from homebrewing to professional brewing were around yeast, packaging, and safety. How the yeast acts in 5-, 100-, and 500-gallons is very different.

If we knew how well our beer was going to sell, we might have just gone for it and opened a 15-barrel brewery to start. But, in reality, we think the path we took was the right path for us. We started small. We tested our recipes. We built a significant customer base. We had years of direct customer feedback and relationship building in our small taproom. We slowly staffed up. We won several awards along the way, and we built our brand. We met all the key chefs and farmers in our community. We collaborated with other brewers. In summary, we set a very strong foundation for the expansion.

My last piece of advice to anyone looking to open their own nanobrewery is to get some professional brewing experience under your belt, even if it is just volunteering one day a week at a brewery where you are watching the brewing process, helping to dig out the mash tun, or bottling. Also, remember that opening a brewery is much more than just making great beer. Make sure you spend a significant amount of time on your brand — what do you stand for, what makes you different, why should customers want to buy from you? Be prepared for when the press calls. Know your story and have your elevator pitch down cold. Finally, even if you are a one-man or one-woman show, invest some time in social media. We’ve found that that is a very easy and cost effective way to connect with our customers.

Brewer: Sam Harriman, Sisyphus Brewing in Minneapolis, MN

I was sick of my corporate job and wanted to do something I enjoyed everyday, which is how I decided to open a nanobrewery. It’s also why I named the brewery after Sisyphus, the Greek king condemned to push a rock up hill for eternity. The moral of that story is we often can’t control the situation around us, so we should do whatever we can to enjoy what is right in front of our faces. I wanted to put brewing there in front of me and see if I could tackle that mountain.

We started with a 2-barrel system. I wanted to create a system and business that my wife and I could manage on our own. We had no desire to go large or grow to be on every tap line and in every liquor store. We had been to enough nanobreweries around the country and our own state to know that this concept can work, despite what many people who have been in the industry for a long time may say.

There was definitely a learning curve, and I’ll honestly say that we were lucky to overcome it. When we first opened, our beer was bad, but we were out of money and had to sell it or just go away quietly forever. If we could go back and do it all over again, I wouldn’t have put us in that situation, but many things came up in the construction/permitting phases that made the projected budget go out the window. You can never have enough working capital when you are starting up. Factor in many, many months of working expenses. There will always be something to buy that will make your brewery better/more productive or help you make better beer. It’s important you have the cash in the bank to not worry about the day-to-day expenses and being able to focus on putting your cash flow to work for you right away. I’ve also learned that I would not want to work this type of brewery model if we were distributing. We are lucky enough to have enough business in our taproom that we don’t need to explore the distributing business.

Anyone considering opening a brewery needs to understand the amount of work and time it takes. I think a lot of people do back of the envelope estimations, thinking “I’ll brew two batches a week, and be open for this many hours, and everything will be great.” People seem to overlook that each batch not only needs to be brewed, but put into a brite tank or kegs, and carbonated, then you have to clean those tanks, order ingredients, maintain the books/paperwork. I was all-in from the start, and working 80–100 hour weeks for well over the first two years. I don’t know how I would have managed everything while trying to keep a job down.

There are advantages to being small, one being that it lets us constantly change and rotate up our beers. We don’t have the same tap list from week to week, and that was one of my goals for the place when we opened. I like walking into a place I haven’t been to in a week or two and finding new things to try. I think a lot of people appreciate that. Another advantage that is also a disadvantage is people in Minneapolis, and around the country, aren’t quite educated or aware of the nanobrewing movement. So people lump us into categories along with the big boys, when we don’t have the money or equipment that they have to make the beer. On the plus side, our beer is right up there with them in terms of quality and people think our small business is bigger than it actually is.

Last fall we added a 90-seat comedy theater/event space to our brewery, and also added four new 5-barrel fermenters that doubled our fermentation capacity. Once we did that, we reached our ideal size. When my wife and I started this business we wanted it to be a small local business that stayed that way. We didn’t get into this to get rich, it was just to make a living and be happy with life. And now that we are both very happy with our lives, we just want to enjoy the ride from here on out. Hopefully we will sell 500ish barrels of beer this year, and then keep doing that year after year until I’m ready to retire.

Brewer: John Adkisson, Iron John’s Brewing Company in Tucson, AZ

We have a 2-barrel system yielding 62-gallon (235-L) finished batches. It is fabricated from commercial soup kettles for our mash tun and hot liquor tank with 100-gallon (380-L) boil kettles and 80-gallon (300-L) stainless steel conical fermenters. We have had customers describe our place as the ultimate garage brewery. My partner and I had a goal of keeping our startup costs to a minimum while still being able to produce enough product to be a viable business. We spent about 10% of what some other small capacity brewers have spent on commercially produced brewing systems. In all my years of teaching brewing, I have always said that the ingredients don’t care how much you spent on the equipment. Good brewing is based on process control, regardless of your budget.

We initially took advantage of our small batch size by producing a constantly changing lineup, only making a few beers more than once per year. We were trying to appeal to that part of the market always in search of something new. By the end of our second year, we had also introduced ten standard beers to meet expectations of the more traditional market elements. Now we pace our production to maintain the ten standards and release up to 40 different specialty beers, including our Belgian, cask-aged, and sour series.

With the advantage of hindsight, I would have made it a priority to start with twice the capital we did, so that marketing and staffing needs wouldn’t be squeezed so tight in the first three. Holding back on merchandising and marketing slows down the growth track and while guerilla techniques can help, marketing is a beast that must be fed.

I would encourage all aspiring brewers to get a fuller education and experience in a commercial brewing environment to better grasp all there is to know and all there is to do in this industry before giving it serious consideration. I also think it is important to realize you are not in the business of making beer, you are in the business of selling beer and you have to embrace that.

Issue: July-August 2016